Community Bankers call for ending ‘too-big-to-fail’

The board of directors for Community Bankers of Wisconsin (CBW) is calling for passage of a U.S. Senate bill that will require the nation’s largest banks to increase their capital requirements.

The CBW Board unanimously supports Senate Bill 798, the Terminating Bailouts for Taxpayer Fairness Act of 2013, introduced by Senators Sherrod Brown (D-Ohio) and David Vitter (R-La.) as a valid solution to curb the too-big-to-fail epidemic.

“The TBTF Act is about changing the conversation regarding too-big-to-fail from we should do something to we have to do something,” said CBW chairman, Paul Hoffmann, who is president and chief executive officer of Monona State Bank. “Too-big-to-fail distorts free markets, incentivizes risky behavior, puts taxpayers on the hook for bailouts, and creates unfair competitive advantages for the largest banks. Community banks are staggering under the weight of excessive regulation that was brought about by the Congress upon passage of the Dodd/Frank (Wall Street Reform) Act. Our members did not initiate or encourage the risky business practices that almost caused a total financial meltdown, but we are suffering the consequences.”

The bill would impose a 15 percent capital standard on the largest banks and an 8 percent standard on midsize and regional banks. In Wisconsin, 100 percent of the banks headquartered in the state will fall under the $50 billion or less threshold outlined in the legislation, and thus capital standards would remain at current levels.

The bill also would limit the federal safety net to depository institutions.

Further, the bill includes a variety of measures that would: 

  • Expand mortgage-lending opportunities under the Consumer Financial Protection Bureau’s mortgage rules.
  • Relieve banks of redundant annual privacy notice requirements.
  • Support greater accountability in bank exams through a workable appeals process,
  • Support mutual banks with new dividend waiver rules.
  • Simplify capital requirements for small bank and thrift holding companies.
  • Exclude community banks from new small-business data-collection requirements.
  • Allow thrift holding companies to use the new 1,200-shareholder Securities and Exchange Commission deregistration threshold.

Wisconsin’s congressional delegation has been asked to support the measure, according to Daryll Lund, president and CEO of CBW.  “We are hopeful that Senators (Ron) Johnson and (Tammy) Baldwin will support this important legislation on behalf of the community banks statewide.”

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